5.5 million.

By June 2023, paid weekday subway ridership was 3.6

million, down 34% from that 2019 level.

The Metropolitan Transportation Authority, the operator of more than 6,400 subway cars,

more than 5,700 busses, two of the country's busiest commuter trains and multiple

bridges and tunnels saw farebox revenue in 2022 plummet 37% from

its 2019 levels.

If you're looking at a roughly $20 billion annual operating budget

before Covid, about half of that came from fare revenues,

when you're still missing a big chunk of your fare revenues and you have to provide the same level of

service, that obviously creates a big hole in the budget.

Remote work is blamed for much of that decline compared to their 2019 levels, Manhattan

office workers were at their desks on average 68% of the time during the mid week

and just 37% on Fridays.

Fears about public safety and crime have also impacted the city's round the clock subway

service.

New Yorkers are on edge as violent crime throughout the city's subway system reaches new

highs. Three subway murders have been recorded in the past two weeks

alone.

Out of the search for the man who police say might have left, a subway rider partially paralyzed.

He's accused of pushing that unidentified victim headfirst into the side of a train.

I would say unfortunately, crime has been a deterrent for some people to return.

I think that folks believe that there is a safety in numbers.

A surge in people not paying their fares has impacted revenue to.

Fare evaders cost the MTA $690 million in 2022 across

its network, 38% more than the previous year.

People are less

rule following than they used to, and that includes subway fare evasion.

Also TikTok young people see young influencers jumping turnstiles in various creative

fashions and it makes it feel more socially acceptable.

You're seeing it modeled by very popular figures in social media.

To stem those losses.

The MTA is looking to replace its fleet of subway turnstiles.

CNBC got a behind the scenes look at a new high tech barrier that the agency

might be considering.

In the old days, you had a locking mechanism and when you paid your fare, the lock would

open and you pushed through the turnstile.

Very simple, very old school.

What we've done is a big departure from that.

We're leveraging not just sensor technology, but also a completely different

mechanical design, a much more formidable barrier.

Fare revenue is a critical component of the MTA's budget.

So when will New York City subway riders return?

And what can the MTA do to respond to fare evaders?

The New York City subway got its start in 1904 and was initially operated by private

companies with government oversight.

The first route was built out from City Hall by the Interborough Rapid Transit Company with

fares of just $0.05 a ride.

The line is credited with transforming Times Square and unleashing a housing boom.

The original two private companies are called the Brooklyn and Manhattan Transit Corporation.

They made what we now think of as the lettered lines or the B division and the Interborough

Rapid Transit Company, which does what we now call the numbered lines with the A division.

By 1940, New York had three competing subway systems.

In June of that year, the trio were consolidated, creating one of the largest transit systems in the

world with nearly 1,200 miles of tracks.

From the early 20th century up until right before World War

Two to be rough about it, the city was focused on building and expanding and

maintaining subways seemed like mass transit was the way that people would get

away a dense city.

But in the 50s, support for mass transit waned, with successive administrations betting on a

future of roads and highways with a focus on the car.

The subway became a symbol of urban decay in the 1970s with rampant crime and trains covered in

graffiti.

This subway station is the end of the line in more ways than one.

At this hour, bodies roll in, sleeping or drunk or on drugs or just because a

subway bench is the most convenient bed.

On an average day in 1981, 325 trains were canceled.

A third of all subway car doors were broken and trains caught on fire 2,500 times a

year. Crime was abundant.

Subway vigilante Bernhard Goetz shot four teens who allegedly threatened him in the

1980s.

It's about time somebody protect themselves.

Nobody's protecting us on the subway.

But as the crisis deepened, political consensus to rebuild the system grew.

We're not going to have a New York City left unless we rebuild the subways so early 1980s,

state legislature enacted a half a dozen taxes to fund subway and commuter

rail system and began to rebuild the physical assets get rid of the graffiti.

New York City Police Department, a decade later started to control the crime on the

subway.

In addition to that funding, the MTA proposed a ten year, $14 billion capital

investment program to restore the system and ensure its long term survival.

Between 1980 and 2015, subway ridership increased roughly

70% from about a billion to almost 1.7 billion riders.

But by 2017, overcrowded trains combined with deferred maintenance were straining the system

again, leading New York Governor Andrew Cuomo to declare a state of emergency.

We know the system is decaying rapidly.

I think of it as a heart attack.

You basically see a series of every 10 or 20 years the MTA faces a new fiscal crisis and then we

figure out a new set of supports.

The eve of the pandemic subway is basically a success story.

You know, not to say that they were perfect, but only 1 or 2 murders a year on the

subways with ridership of 2 billion was the lowest you were ever going to get it

. Well funded you had half the revenue coming from fares and tolls, the other half coming from

these tax subsidies.

And the infrastructure was in reasonably good condition.

But the pandemic changed everything.

As ridership plummeted to historical lows and new problems arose.

The MTA handles about a third of the nation's mass transit users, about 2.6

billion riders in 2019 alone.

More than 13% of New York City's subway riders didn't pay their fare in the fourth quarter of

2022, up from just 3% during roughly the same period in

2018. On an average weekday, that translates to 400,000 fare

evaders, enough to fill Yankee Stadium eight times over.

The problem got even worse in the first quarter of 2023.

Fare evaders cost the MTA $690 million in 2022, including

$285 million on its subways, $315 million on buses,

$44 million on commuter rails and $46 million on bridges and

tunnels. While enforcement is up, policing the subway is notoriously difficult.

It's extremely hard to enforce.

I would estimate there are about 1,000 entrances to the subway system.

To curb unlawful behavior the MTA is looking to replace turnstiles.

As I step into the aisle here, the cameras are sensing me and if you look up at the screen,

you see that there's a big red blob.

The big red blob here above me, that's me.

Conduit, which provides services like electronic toll collection, worked with France's national

rail network SNCF, to design the system.

You think about the cameras and the detection systems that go into that solution are are quite

advanced to be able to detect children from parents, from luggage, from animals

and prevent unwanted individuals or devices from coming through.

Tall plexiglass doors make climbing over or under more difficult.

Flashing lights and an alarm signals a fare evader is trying to enter.

The MTA has not yet decided which tech it will use, but Conduent, along with other vendors,

showcased its 3D fare gate at a public MTA meeting in May.

This is not your grandfather's approach to fare evasion.

It's fresh, it's different.

It's comprehensive.

It can also detect if someone is trying to piggyback or cheat the system.

If I pay my fare and someone comes in right

behind me and doesn't pay theirs, the system will determine that they haven't

paid and they'll get busted.

In New York, the majority of subway fare evasions happen when someone leaves the emergency gate

open. About 20% of people jump the turnstile.

About 16% slipped through the gap and 12% duck under.

Most offenses occur between 3 and 4 p.m., roughly the same time schools dismiss.

Inflation could be another reason people are not paying their fares.

A lot of it has to do with the economy.

It's one more cost that people feel like they have to incur when they're already seeing

increased costs for rent and groceries and all of their other

expenses. And often they see the risk of jumping the turnstiles as

worthwhile for the potential $100 ticket.

While low income residents can apply for a 50% discount on subways and busses, only about a

third of eligible New Yorkers, or about 300,000 people have enrolled in the program.

One in four low income New Yorkers can't afford to use public transportation.

In the MTA's case, if we lost fare revenue, we would have we'd have massive service cuts.

And so it's well worth a functioning fare collection system that keeps fare evasion low

and stable is the important part.

While fewer straphangers have been a drain on the MTA's revenue, systems in other US cities

have been hit even harder.

Riders on Chicago's L Train in March 2023 were at 50% of their pre-pandemic

levels. At the same time, Washington, D.

C.'s Metro saw a similar drop.

In 2022 the MTA's operating budget was $19.3 billion, while the majority of

that money it receives comes from taxes and subsidies about 23% or roughly $4

billion came from fares.

By contrast, fare revenue from subways, buses and commuter trains in

2019 made up about $6.3 billion or 38% of the MTA's total

operating revenue.

To make up for that loss, the MTA received billions in federal pandemic aid.

It is also increased its base fare $0.15 for subways and buses to

$2.90, and has been promised an infusion of state money, including over $1

billion annually in the form of an increase in the New York State payroll mobility

tax. Congestion pricing designed to shift people to mass transit will also

collect $1 billion annually and benefit the MTA by charging drivers more to enter

Manhattan below 60th Street.

But why do New York City subways lag behind their European counterparts?

For starters, New York transit projects are notoriously expensive to build.

Our cost of building subway assets is five

times at the upper end what it costs to build a global subway assets.

So it's not so much that the projects are the wrong projects, although that doesn't help,

but it's that even when they're the right projects like building the Second Avenue Subway,

digitizing the subway signals so you can run these trains more quickly, the

projects cost much more than they would anywhere else in the world.

Phase one of the Second Avenue subway, for example.

along Manhattan's Upper East Side opened in 2017 at a cost of $4.4

billion. Phase two of the project extending the line from 96th Street to

125th Street, not expected to open until 2030, will cost $6.3

billion.

Greater Paris, the Ratp, it's called, has the same capital budget as the MTA it's about €50

billion or $55 billion and they're building hundreds of kilometers of new rail.

We're not doing that.

We're going to get a little extension in Second Avenue Subway and then hopefully repair some

broken stuff.

New York City's strict regulations, as well as high labor and construction costs, have been

blamed for much of those budget increases.

If you think of world cities like London, Paris, Singapore, there is

massive federal investment in their mass transit systems.

Here in the United States, it's far less of a focus.

Public transit gets very little funding compared to our

highways and bridges and tunnels.

Outside of the transit system, this country really favors motorists.

Large debt payments are also a burden.

While more than half of the MTA's $19 billion 2023 expense budget went to

New York City subways and the Staten Island Rail about 16% went to paying back debt.

The remainder went to the Long Island Rail, Metro, North rail, buses, bridges and

tunnels. A debt payment of $3 billion, for example, is enough to run the Washington,

DC metro system for an entire year.

The MTA has to be in this constant state of begging for state

assistance and federal assistance.

This was happening long before the Covid 19 pandemic.

Every couple of years, the MTA has to reach out with its hands out because there

isn't a fully committed line of funding that really

ensures the ability of the MTA to provide operations and capital

improvements on a regular, consistent basis.

And that trend could continue as work from home and hybrid policies become further

entrenched it could take years before fare revenue and subway ridership return to

their pre-pandemic levels.

Where is the transit system ten years from now?

Ideally, you've got ridership back to 100% or at least

95% of where it was pre-COVID.